MicroStrategy unit obtains $205 million collateral loan from Silvergate to buy Bitcoin

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MacroStrategy, a subsidiary of MicroStrategy (MSTR), received a $205 million term loan from crypto-payments provider Silvergate Bank (SI).

  • The loan was made through the Silvergate Exchange Network (SEN) Leverage program, which issues US dollar loans using bitcoin as collateral. The loan was secured by approximately $820 million worth of bitcoins, according to a regulatory filing.

  • MicroStrategy shares were flat during premarket trading.

  • MicroStrategy, a software company, has become best known for its bitcoin adoption. In the fourth quarter, the company took an impairment charge of nearly $150 million on its bitcoin holdings due to declining cryptocurrency prices.

  • The interest-only loan is collateralized by a certain portion of bitcoin held in MacroStrategy’s collateral account, which has a mutually agreed-upon custodian.

  • MacroStrategy may use the Loan to purchase Bitcoin or pay interest and fees on the Loan or for general MacroStrategy or MicroStrategy purposes.

  • Launched in 2020, Silvergate’s SEN Leverage program had $570.5 million in commitments as of the end of last year, according to the press release.

  • “The SEN Leverage Loan gives us the opportunity to strengthen our position as the leading public investor in bitcoin,” MicroStrategy CEO Michael Saylor said in the press release. “Using the capital from the loan, we have effectively turned our bitcoin into productive collateral, allowing us to continue to execute our business strategy.”

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